S&P Predicts Congress Will Renew TRIA

Standard & Poor’s Corp. said in a recent analysis that Congress would reauthorize the Terrorism Risk Insurance Act, but the ratings firm cautioned that the program could be significantly changed...

March 20, 2014

Standard & Poor’s Corp. (S&P) said in a recent analysis that Congress would reauthorize the Terrorism Risk Insurance Act (TRIA), but the ratings firm cautioned that the program could be significantly changed. However S&P notes that TRIA, which will expire at the end of 2014, could be renewed with a higher insurance industry trigger for terrorism attacks, increased deductibles, a “mandate that insurers explicitly cover newer threats, such as terrorist cyber attacks,” or other requirements, said S&P. The ratings firm remains “cautiously optimistic” that TRIA will be renewed but noted that “significant work remains to be done before any extension will be enacted.”

What It Means to Agents: PIA supports renewal of TRIA. We note that as Congress moves forward on reauthorizing TRIA, it is important to keep the program at a point where all companies, small and large, have an opportunity to participate. An increase to cost thresholds, including higher deductibles or a higher share of losses over the deductible, could price this program out of the hands of many insurers, which PIA cautions against.